Why Digital Assets Are a Must in Your Estate Plan: A Guide to Proper Treatment

As an estate planning lawyer, I’ve seen firsthand how our lives are increasingly intertwined with the digital world. From online banking to cherished family photos stored in the cloud, digital assets are a significant part of our personal and financial lives. Yet, many people overlook these assets when creating their estate plans, potentially leaving loved ones locked out of valuable accounts or sentimental treasures, sometimes with tragic consequences.  

The law governing digital assets, such as the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), is complex due to its three-tier hierarchy for access—online tools, legal documents, and terms-of-service agreements—and custodians’ discretion to limit disclosure or require court orders. This complexity often makes it difficult for fiduciaries, your trustees and agents, to access accounts without proper planning, which is why professional guidance is essential.  I've written two specific articles regarding the law governing  digital assets in estate planning, one applicable to Ohio, the other to Missouri.  The law is not simple to understand or easy for a layperson to follow in order to protect digital assets.  

I’ll explain in this article why digital assets deserve a central place in your estate plan, provide practical, actionable steps you should take to protect them.  I have prepared Digital Assets Inventory Worksheets and an explanatory Cover Sheet, and  in the article immediately following this article, I offer detailed instructions to help you get started protecting your digital world.

Why Digital Assets Matter in Estate Planning

Digital assets encompass a wide range of items, including email accounts, social media profiles,  cryptocurrency, loyalty program rewards, online businesses, and digitally stored photos or documents. According to NordPass, the average person manages 168 online accounts, with an estimated average value of $191,516 for Americans’ digital assets, per a Bryn Mawr Trust survey. 

Despite their prevalence and value, 76% of Americans have little to no knowledge of digital estate planning, often leaving these assets unaddressed in their plans. This oversight can lead to significant challenges for your heirs, such as:

• Financial Loss: Valuable assets like cryptocurrency or online business accounts may become inaccessible without proper access instructions.

• Sentimental Loss: Family photos, videos, social media memories, or digital content, e.g., recipes, workout videos, and stories, may be lost if no one can access them.

• Cybersecurity Risks: Unmanaged accounts could expose personal information, increasing the risk of identity theft, and expose vulnerable family members to exploitation.

• Aging in Place Planning: For clients focused on aging in place, digital assets like Smart Home and IoT Accounts (e.g., Vivent, ADT, Amazon Alexa, Ring) and Health & Fitness Accounts (e.g., Fitbit, Apple Watch) are critical, supporting independent living by managing home security (e.g., locking doors remotely), temperature, active and passive emergency notifications (e.g., triggered alerts or automatic fall detection), daily routines (e.g., medication reminders), and health monitoring. Ensuring your trustee can access and manage these accounts, as documented in your Digital Assets Inventory Worksheet, helps maintain your home environment during incapacity, aligning with your goal to remain in your home as long as possible, with legal authority under RUFADAA.

• Time: Loved ones may spend countless hours  trying to gain access to accounts, adding stress during an already difficult time.

• Cost:  Subscription services often auto-renew and drain estate funds if not canceled or managed after death. 

• Legal Peril: The digital world is a world of information, and this information can be legally significant in real life. Consider the following example: A stepchild contested a stepmother’s will disinheriting them, alleging incompetence and undue influence, ten years after the will was drafted. The executor, a daughter, preserved her mother’s digital footprint, which included text messages discussing the decision, GPS data showing independent activities, game logs (e.g., solitaire, sudoku) demonstrating cognitive ability, and videos sent to a grandchild. This evidence of a grandmother—vibrant, capable, independent, and resolute—proved the deceased’s competence, leading to a nuisance settlement. Without this digital evidence, the outcome might have been different.

• Health Information: Digital health data may be vital in legal contexts, such as wrongful death claims or guardianship disputes over competency.

• Financial Information: Evidence of gambling, scams, or financial support may be exculpatory in civil or criminal cases involving allegations of elder exploitation, or necessary to prove such exploitation.

Imagine a family unable to access a $50,000 Bitcoin wallet because the private key was not documented, or a widow losing access to a Google Photos account containing decades of family memories because no one was designated to manage it. These scenarios highlight the real consequences of neglecting digital assets in your estate plan.

         

As a trusted advisor, I recognize that managing your digital footprint is non-negotiable for a comprehensive estate plan. Ignoring digital assets risks your legacy and exposes your family to risk or loss. By proactively including digital assets in your estate plan, you can ensure your wishes are honored and your loved ones are spared unnecessary complications.  Your digital assets may also help protect you, financially and legally from exploitation or abuse.

If you have an estate plan drafted by my office within the past ten years, your estate planning documents already address digital assets:

• General Durable Power of Attorney:  Your power of attorney confers authority to your agent to manage digital assets owned by you during your life.

• Revocable Trust:  Your trust document confers to your trustee the authority to manage digital access owned by your trust while you are alive.  Additionally, your trust confers authority to your trustee to manage digital assets after your death. 

Regardless, this is a rapidly evolving area of the law.  Consider simple, inexpensive revisions to your planning document relating to digital assets every three to five years.    
 

Action Items for Including Digital Assets in Your Estate Plan

To bring order to your digital assets and secure your legacy, here are key steps you should take, along with how our firm can assist:

• Create an Inventory of Your Digital Assets: Start by compiling a comprehensive list of your digital assets. This includes accounts, devices, and any digital property with financial or sentimental value. Use the inventory sheet provided below to organize this information. Keep this list in a secure location, such as your LegalVault®, a password manager, or a safe deposit box, and inform your executor or a trusted person where to find it.

• Appoint a Digital Fiduciary:  Designate a tech-savvy individual as your digital trustee/executor to manage your digital assets after your passing. This person should be named in your will or trust, with clear authority to access and distribute your digital property. We can help draft specific provisions to ensure compliance with laws like the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA).  If your successor trustee is not tech-savvy, you can select a specific person to handle only the the tech or digital role.  

• Include Digital Assets in Legal Documents:  Incorporate clear instructions for your digital assets in your will, trust, or power of attorney (POA). For example, a POA can grant an agent authority to manage your online accounts if you become incapacitated. Our firm will work with you to include language that aligns with your wishes and legal requirements.

• Use Online Tools for Account Management:  Take advantage of platform-specific tools like Google’s Inactive Account Manager or Facebook’s Legacy Contact to designate who can access or memorialize your accounts. We can guide you through setting up these tools to complement your estate plan.

• Regularly Update Your Digital Asset Inventory:  Digital assets evolve rapidly, so review and update your inventory annually or when significant changes occur (e.g., new accounts, inactive accounts, sold cryptocurrencies). During our estate plan reviews, we’ll prompt you to provide updates on your digital assets to keep your plan current.

• Secure Access Information:  Store login credentials and two-factor authentication (2FA) details securely, using a password manager or encrypted digital vault. Avoid including passwords directly in your will; it becomes a public document during probate. Our firm can recommend secure storage solutions like LegalVault® and ensure your trustee/executor knows how to access this information legally.

• Check Transferability of Assets:  Not all digital assets are transferable due to terms of service agreements. For example, some loyalty points, memberships, or digital media may not be passed to heirs. We can help you verify which assets can be passed on and structure your plan to maximize their value for your beneficiaries.

Special Considerations

Often, a person is asked to manage digital assets he or she may have little familiarity with, and little appreciation of their significance or worth. The following are special considerations about which you should be aware.

• Messaging Apps: These often contain important communications (e.g., family messages, business discussions) that may be merely sentimental or legally relevant. Separating them from email accounts highlights their distinct nature and ensures fiduciaries address them. Fiduciaries should be aware that these apps may contain legally relevant communications, such as evidence of intent or agreements, which could be critical in disputes over estate administration.

• Blockchain Accounts: Cryptocurrencies and non-fungible tokens (NFTs) are increasingly common digital assets with significant financial value. They often require private keys or seed phrases for access, which fiduciaries need to manage. Attention to this category ensures these high-value assets are not overlooked.

• Music Streaming Accounts: These accounts may contain purchased music, playlists, or subscriptions that the grantor wishes to preserve or transfer. These are distinct from broader entertainment accounts like Amazon Prime.

• Gaming Accounts: These accounts may contain purchased games, in-game assets, or subscriptions.

• Intellectual Property and Creative Accounts: Accounts hosting creative works (e.g., writing, music, photography) may have monetary value (e.g., royalties) or sentimental value (e.g., unpublished works). This category ensures these assets are captured beyond blogs in “Publication Accounts.

• Health and Fitness Accounts: Health and fitness accounts may contain valuable data (e.g., genetic information, fitness history) that the grantor wishes to share with family or delete for privacy reasons. Genetic accounts like 23andMe also have privacy implications that fiduciaries should address. This information may also be legally relevant, for example, if there is a wrongful death claim, or a claim of incompetency or incapacity (guardianship or conservatorship). Additionally, Health & Fitness Accounts can monitor vital health metrics and share data with caregivers, further supporting your independence.

• Smart Home and IoT Accounts: Smart home devices often have associated accounts that control access to data (e.g., Ring camera footage) or settings (e.g., thermostat schedules). These may need to be managed or transferred to ensure home security or functionality.

• Wearable Device Accounts: Wearable devices, while related to “Electronic Devices,” often have separate accounts for data storage (e.g., fitness tracking) that may not be captured under the device itself. These accounts may contain health data relevant to the grantor’s estate plan. These have privacy implications that fiduciaries should address. This information may also be legally relevant in the same way as health and fitness accounts. 

• IoT- Internet of Things: IoT stands for Internet of Things. It refers to a network of physical devices, vehicles, appliances, and other objects embedded with sensors, software, and connectivity, allowing them to collect, exchange, and act on data over the internet. In the context of the Digital Assets Inventory Worksheet, IoT accounts (e.g., Amazon Alexa, Google Nest, Ring) are included as an asset type because these devices often have associated online accounts that store data (e.g., camera footage, voice recordings) or control settings (e.g., thermostat schedules), which fiduciaries may need to manage. Immediate access may be necessary to maintain home security (e.g., Ring camera footage) or functionality (e.g., thermostat settings), especially for aging-in-place clients who rely on these devices for independent living. Examples of IoT devices include smart home systems, wearable tech like smartwatches, and connected vehicles.

• Password Manager Accounts: While the worksheet includes a “Password Manager” column, treating password managers as a distinct asset type ensures they are inventoried as a critical access point for other accounts. These accounts often centralize credentials, making them a priority for fiduciaries. These accounts centralize access to other assets, but their credentials must be stored securely to prevent unauthorized access, as they can unlock your entire digital estate.

How Our Firm Protects Your Digital Asset Wishes

At Monty L. Donohew, LPA, we take a proactive, client-centered approach to digital estate planning. Here’s how we ensure your digital assets are protected:

Customized Legal Documents: We draft trusts, wills, and Powers of Attorney with specific provisions for digital assets, ensuring compliance with RUFADAA and platform terms of service.

Final Instructions and Forms: We provide every trust client with a set of Final Instructions and Forms, empowering your trustees and agents with the knowledge, tools, and forms, to administer or settle your trust with confidence, significantly minimizing future legal expenses. 

Education and Guidance: We educate you on the importance of digital assets and guide you through creating and maintaining your inventory.

Secure Planning: We recommend secure methods for storing access information and work with you to appoint a capable digital fiduciary.

Secured Planning Documents: We encourage and work with you to set up secure storage of your estate planning documents, introducing, employing, and deploying for you such third party services as LegalVault®.

Ongoing Support: During periodic estate plan reviews, we’ll revisit your digital asset inventory to help keep it up to date and aligned with your goals.

Collaboration with Experts: If your digital assets include complex items like cryptocurrency or online businesses, we collaborate with financial and tech experts necessary to ensure proper management.

Take the Next Step Today

Your digital assets are a vital part of your legacy, and neglecting them could leave your loved ones grappling with chaos. By taking the steps outlined above, you can bring order to your digital life and provide peace of mind for yourself and your family. Start by completing the digital asset inventory sheet and scheduling a consultation. We’ll work together to integrate your digital assets into a comprehensive estate plan tailored to your aging-in-place goals.

I understand you might be concerned about the time, cost, or privacy implications of managing your digital assets. Rest assured, updating your estate plan to include digital assets is a straightforward process that typically takes just a few hours and offers significant long-term value by avoiding costly legal disputes. Our firm prioritizes your privacy, recommending secure storage solutions like LegalVault® to protect sensitive information while ensuring your fiduciaries can access what they need.

Ready to secure your digital legacy? Contact us to book an appointment. Let’s ensure your digital assets are as protected as your physical ones.

Understanding DAOs, DAO Collectibles, and Their Impact on Estate Planning

The digital age has brought, for some, exciting new concepts like “DAOs” and “DAO collectibles,” which might sound technical but are easier to understand than you’d think. These digital assets are different from digital currencies, and they can play a big role in planning not just for what happens to your belongings after you pass away, but also for managing your assets while you’re alive—especially if you become unable to make decisions due to illness or incapacity. In this article, I will break it all down in plain language, explore how these assets fit into your planning, and provide practical guidance, including sample language for legal documents.

What is a DAO?

Picture a group of people who come together online to make decisions as a team, like a book club or a community project, but instead of a leader calling the shots, everyone votes, and the rules are enforced by computer code. That’s a Decentralized Autonomous Organization (DAO). A DAO runs on a blockchain- a secure, digital record-keeper, like that used for cryptocurrencies, and uses “smart contracts” (self-running programs) to handle things like voting or spending money.

For example, a DAO called “AICollective” might pool money to invest in artificial intelligence projects. Members own digital “tokens” that act like membership cards, giving them a say in decisions, such as which projects to fund. Because it’s “decentralized,” no single person is in charge, and it’s “autonomous” because the code keeps everything fair and transparent.

What is a DAO Collectible?

A DAO collectible is a unique digital item linked to a DAO, often called an NFT (Non-Fungible Token). Think of it like owning a rare comic book, baseball card, or piece of art, but it’s digital and stored on the blockchain. These collectibles might represent membership in the DAO, a piece of digital art, a virtual plot of land, or a share in something the DAO owns, like a real-world asset.

For instance, a DAO named “ArtCollective” could issue 50 NFTs, each tied to a famous painting they bought together. If you own one, you’re a member of the DAO and might vote on whether to loan the painting to a museum. These collectibles can be valuable, especially if the DAO or its assets gain popularity.

How Are DAOs Different from Digital Currencies?

Digital currencies, like Bitcoin or Ethereum, are like digital cash. You can spend, trade, or save them, and they’re “fungible”—one Bitcoin is worth the same as another, just like a dollar bill. They’re built for transactions, like buying goods or sending money.

DAOs and DAO collectibles aren’t money. A DAO is a way to organize and collaborate online, like a digital co-op. DAO collectibles are one-of-a-kind items, like owning a unique piece of art or a VIP pass, not something you’d use at a store. You might buy a collectible with digital currency (like using Ethereum to get an NFT), but the collectible’s purpose is tied to ownership, membership, or voting in the DAO.

Why Do DAOs/DAO Collectibles Matter for  Planning?

Planning for your assets has two big big goals: estate planning, which decides fundamentally who receives your belongings (money, house, digital assets) after you pass away and how they are received, often incorporating estate or income tax, and asset protection plannings, and life planning, which defines how and by whom your assets are managed during your lifetime, especially if you become incapacitated and can’t make decisions due to illness, injury, or mental decline. DAOs and DAO collectibles affect both because they’re valuable, digital, and complex. 

Here’s why they matter:

• They Can Be Valuable:  DAO collectibles, like rare NFTs, can be worth thousands or even millions. If you own tokens or NFTs tied to a successful DAO, they could be a major part of your wealth. Your estate plan needs to ensure they go to your chosen heirs, like your spouse or children, while your life plan should cover who manages them if you can’t.

• They’re Hard to Access Without Instructions:  DAO tokens and collectibles are stored in a digital wallet, protected by a private key (a super-secure password). Without access to your wallet, neither your family (after you’re gone) nor your trusted representative (during your life) can claim or manage these assets. Clear instructions in your estate and life plans are critical to avoid losing them, and to facilitate control by your trusted fiduciaries.

• DAOs Involve Ongoing Responsibilities: DAO tokens often come with voting rights or duties, like deciding how the group’s money is spent. Your plans should specify who handles these responsibilities if you’re incapacitated or after you pass. For example, do you want your trusted agent to vote in a DAO that owns property, or should your heirs inherit and decide?

• Tax and Legal Issues:  Laws around digital assets are still evolving and vary by country. When you die, your collectibles might face estate taxes, and during incapacity, someone may need to report income from DAO activities. Your plans can include guidance to handle taxes and legal requirements smoothly. Keep in mind that application and enforcement of even well settled rules and principals is uncertain, and might bring anomalous results.  

• They’re Not Like Physical Items

Unlike a car you can hand over, transferring a DAO collectible means sharing digital wallet access. Your estate plan must explain how to pass them to heirs, and your life plan needs to empower someone to manage them securely if you’re incapacitated, without risking theft by hackers.

Planning for Incapacity with Trusts or Powers of Attorney

To manage DAOs and collectibles during your lifetime, especially if you become incapacitated, you can use tools like a trust or a general durable power of attorney. A trust lets you appoint a trustee to manage your assets according to your instructions, either now or if you can’t make decisions. A power of attorney names an “agent” (someone you trust) to act on your behalf, and “durable” means it stays valid even if you lose mental capacity.  These documents, however, should be tailored to confer authority explicitly digital assets, and should identify whether the trustee or agent has unlimited or restricted authority to vote or make decisions within the DAO.  Because these are unique and fairly new assets, you probably don't want to rely on well-established fiduciary duties to guide agents and trustees; how these duties might be interpreted and applied in this new world is uncertain. 

For example, if you own a valuable NFT tied to a DAO, a trust could hold it and authorize your trustee to manage voting or sales if you’re unable to.  Alternately,  or, a power of attorney could empower your agent to gain access to your digital wallet to handle your DAO responsibilities, like voting on a proposal, during a hospital stay.

Sample Language for a Power of Attorney

To ensure your agent can manage your DAOs and collectibles, your power of attorney needs specific language to cover digital assets and DAO-related actions. 

Here’s an example of what you might include in a general durable power of attorney (note: always work with a lawyer to tailor this to your situation and local laws):

Digital Assets and Decentralized Organizations: I grant my agent the authority to access, manage, transfer, sell, or otherwise deal with my digital assets, including but not limited to Decentralized Autonomous Organization (DAO) tokens, Non-Fungible Tokens (NFTs), and other blockchain-based assets stored in digital wallets or accounts. This includes the power to: (1) Access my digital wallets using private keys, seed phrases, or other authentication methods, as securely provided by me; (2) Exercise all rights and interests associated with my DAO memberships, including, but not limited to voting on proposals, participating in governance, and managing distributions or benefits; (3) Buy, sell, trade, or transfer DAO collectibles and tokens on my behalf, including engaging with smart contracts or blockchain platforms (4) Delegate tasks related to DAO participation or collectible management to third parties, as deemed necessary, while maintaining oversight of their actions.

My agent shall act in my best interests, consistent with my prior actions or stated preferences regarding these assets, and shall take reasonable steps to secure access credentials to prevent unauthorized use.

This language gives your agent permission to handle your digital assets, vote in DAOs, and manage collectibles if you can’t, while emphasizing security and your wishes.

Tips for DAOs and DAO Collectibles in Your Plans

To protect your digital assets during life and after death, consider the following:

• Inventory Your Assets: List all your digital assets, DAO memberships and collectibles, noting the DAOs, tokens, NFTs, blockchains (e.g., Ethereum), and their estimated value.

• Secure Your Wallet: Store private keys or recovery phrases safely, like in a bank vault or with a trusted attorney. Consider multi-signature wallets or key-splitting services for added security.

• Provide Clear Instructions: In your will, trust, or power of attorney, explain how to access and manage your digital assets. For example, “My son should inherit my AICollective DAO tokens and vote on my behalf, or sell them if the DAO dissolves.”

• Work with Experts: Digital asset laws are complex. Consult a lawyer familiar with blockchain and estate planning to ensure your trust or power of attorney covers everything legally.

• Review Regularly: DAO collectibles can spike or drop in value, and DAOs may change rules or close. Update your plans every year or two to reflect what you own and want.

Conclusion

DAOs are like online teams run by members and code, while DAO collectibles are unique digital treasures, like rare NFTs, tied to those teams. Unlike digital currencies (online money for spending), DAOs and collectibles are about collaboration and ownership. They matter for both estate planning—passing assets to heirs—and life planning, like managing assets if you’re incapacitated. Tools like trusts or powers of attorney, with clear language, let trusted people handle your DAOs and collectibles securely during illness or after you’re gone.

By cataloging your assets, securing your wallet, and planning with care, you can ensure your digital legacy is protected, whether it’s voting in a DAO or passing a valuable NFT to your family. A little planning now keeps your digital world safe for the future, no matter what life brings.